Trading Update

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Tuesday 13 September 2005

Summary

This statement updates investors on the Group's progress in the current year, ahead of its year end on 2nd October, 2005. For the newspaper divisions, the reporting period will include one fewer week's results, compared to last year.

Since the Group last reported in May, its UK consumer-facing businesses have experienced a further weakening in advertising markets and each has undertaken, or embarked upon, cost reduction exercises for varying reasons. The rest of the Group has continued to trade well, with the information publishing division particularly strong.

The Group's long-standing strategy of reducing its dependence on traditional UK advertising markets is therefore serving it well and means that a satisfactory trading performance for the full year continues to be expected, a view in aggregate unchanged over the last six months.

National Newspapers

The Daily Mail and The Mail on Sunday have again outperformed their peers in a declining market. The average circulation of the Evening Standard for the six month ABC period to August was up 12%, including the Lite edition, launched in December 2004. Metro's distribution averaged over one million copies. Associated Newspapers' overall circulation revenues for the eleven months to August were 1.6% below the comparable period last year.

Despite weak market conditions since April, Associated's advertising revenues have increased by 1.7% for the eleven months to the end of August, compared to the same period last year. Its display advertising revenues rose by 0.4%, buoyed by a strong performance by the retail category in the first half of the year. Retail and travel have enjoyed year on year increases, but both finance and motors have declined. By title, display advertising at Metro is up 19% and the Evening Standard up 0.2%, but the Daily Mail is down 2.5% and The Mail on Sunday down 1.3%.

Overall classified advertising revenues for the eleven months to the end of August were up 5.3%, although this result was enhanced by the good performance of the digital media properties, principally Jobsite, which was only owned for part of the previous year.

The migration of advertising from mono to colour since the introduction of increased colour and pagination at the end of November 2004 has continued, providing some protection of revenues. Colour advertising revenues in those nine months were up 13% year on year with no reduction in yields.

Regional Newspapers

Northcliffe Newspapers, like the rest of the regional newspaper industry, is experiencing challenging trading conditions. The performance of recruitment revenues is the worst experienced for fifteen years, being 14% below last year over the three months to August.

Despite this, Northcliffe's UK advertising revenues for the eleven months to August were 1.7% ahead of the same period last year. On a like-for-like basis, UK advertising revenues have increased by 1.1%. The rate of growth of property (up 14%, but only 7% ahead over the past three months) is slowing, whilst the decline in recruitment (down 5%) has increased over the summer. Motors and display categories continue to find market conditions difficult, but notices revenues have benefited from the requirement for restaurants and public houses to reapply for their licences. Revenues from digital publishing are 20% above last year for the eleven months to August.

UK circulation revenues for the eleven months to August were 1.9% ahead of the same period last year, or 0.1% excluding acquisitions. In the January to June 2005 ABC period, Northcliffe continued to out-perform the regional newspaper industry average circulation figures.

As previously announced, Northcliffe has embarked upon a two-year programme of organisational and structural improvements, the benefits of which have already started to accrue.

Information publishing

DMG Information's business to business division continues to generate strong revenue and profit growth with total revenues for the year expected to be up approximately 20% at constant exchange rates and margins improving. In the careers division, both revenues and profits are expected to increase year-on-year.

DMG Information will be making a presentation to the City later in the month when further comments on its trading performance will be released to the market.

Exhibitions

DMG World Media is performing in line with last year, despite this being a cyclical low year. A strong performance from acquisitions, principally Gastech and Adtech, has offset the absence this year of the Index show in Dubai and of the biennial Global Petroleum Show. The consumer sector continues to experience challenging trading conditions in the home interest market, both in the UK and North America. Business to business and the art & antiques sectors are trading aead of last year, whilst the gift sector is in line.

Broadcasting

At DMG Broadcasting, there has been no improvement in Teletext's trading conditions with total revenues for the full year expected to finish the year around 15% down on last year. Teletext is seeing declining revenues from its analogue television services as audiences decline, accentuated this year by a tough market generally, online competition and tighter market capacity for late availability holidays. As a result, a restructuring of the provision of these services is being undertaken. Its new digital services, launched in June, have seen an encouraging start and its online revenues are up 80% year on year.

DMG Radio expects to see like-for-like revenue growth of around 26% for the year (excluding the regional stations sold in September 2004), partly down to the completion of the Nova network with its Brisbane launch in April. There were signs of a softening advertising market in June and July, but this seems
to have reversed. DMG Radio's new station in Sydney, Vega 95.3 FM, was launched in August and its sister station, Vega 91.5FM in Melbourne, launched its breakfast programme last week.

Exceptional items

The Group expects to take a charge of approximately £15 million as exceptional operating costs, principally for the first phase of Northcliffe's reorganisation programme and for Teletext's restructuring. These costs will be substantially offset by net exceptional gains arising on the sale of shares in Reuters Group plc and of businesses, including the California Market Center.

Accounting policies

As previously announced, the Group will be reporting its results for the year to 2nd October, 2005 under applicable UK accounting standards. DMGT will be adopting international financial reporting standards, as required, from its 2005/06 financial year and will give a further update on the likely impact on it at the time of its preliminary results' announcement on 30th November.

Enquiries:
Peter Williams, Finance Director, DMGT, 020 7938 6631
Nicholas Jennings, Company Secretary, DMGT, 020 7938 6625
Andrew Honnor, Tulchan Communications, 020 7353 4200